Gleaming Like Torches, Darting Like Lightning: Does God Love Fossil Fuel?

Before Senator By Appointment Only™* Dean Heller (R-NV) makes too many more comments about “failed” solar energy manufacturing efforts, it might do to note, as did Senator Harry Reid (D-NV):

“Last year, Amonix CEO Brian Robert­son was tragically killed in a plane crash and unfortunately the company was unable to recover from this difficult time,” Reid said Wednesday in an email statement. “Some people will be tempted to use today’s unfortunate news for political gain. But I am hopeful that the bipartisan support for this project and the public-private partnership that helped make this and many other projects possible will not be degraded by dirty energy supporters for their own profit or political gain. The clean energy sector is too important to Nevada’s future, and I hope that those that publicly acknowledge this will continue to strengthen the bipartisan support for renewable energy programs and incentives that exists in Nevada.” [LVRJ]

The grant for the Amonix plant was approved by the George W. Bush administration in 2007, and eventually received $15.6 million in support.

The abject failure of the Humboldt Canal in 1863 doesn’t mean that all government subsidies for canal building were a loss.  Secondly, we need to step back a moment and note that government assistance — at all levels — for railroad construction in another era was not without its critics:

“Although the first railroads were successful, attempts to finance new ones originally failed as opposition was mounted by turnpike operators, canal companies, stagecoach companies and those who drove wagons. Opposition was mounted, in many cases, by tavern owners and innkeepers whose businesses were threatened. Sometimes opposition turned to violence. Religious leaders decried trains as sacrilegious. But the economic benefits of the railroad soon won over the skeptics.”  [USH.org]

Sound familiar?  There’s nothing like stalwartly defending the entrenched special interests (substitute oil companies for turnpike operators, canal companies, and stage coach firms above) to create a climate in which economic and technological progress is rendered extremely difficult.  The situation was similar in the U.K. after the opening of the Manchester-Liverpool Line.  In that instance, the landed gentry joined the stage coach companies and the canal owners in opposition to the construction of railroads, with conservative pastors quoting Nahum 2:4 on the destruction of Nineveh:

“The chariots race madly through the streets;
they rush to and fro through the squares;
they gleam like torches;
they dart like lightning.”

Yes, Nineveh didn’t survive the sacking in 616 BC, but Baltimore, New York, Chicago, Philadelphia, and Memphis did quite nicely as rail hubs for those “madly racing chariots.”  Evidently, more members of the national congregation were attending to sermons like those delivered by Reverend S.C. Aiken in 1851.

“This prophecy, reminds me of an occasion similar to the one, that has called so many strangers to our city: “when, on the opening of the Erie Canal, it was my privilege, on the Lord’s-Day, to address De Witt Clinton, and the Commissioners, in grateful recognition of the beneficent Providence, which had carried them on to the completion of a work, deemed chimerical by some and impolitic by others: but which has proved a highway for commerce, and made many a wilderness and solitary place to blossom as the rose.”

There is no small amount of danger for those who cite everything from Scripture to short term economic statistics in defense of the status quo.   If we wish to remain in the technological wilderness, making do with a primary emphasis on fossil fuels, we risk clogging our highways of commerce, and artificially stunting our own long term economic growth.  While other nations would like to “blossom as the rose,” opponents of alternative energy experiments would have us settle for the dandelions.

*”Senator By Appointment Only” is the sole product of The Gleaner, who can be found here.

Solar Energy, Jobs, and Tribal Lands: A good combination

This is how it’s done:  “Solar Energy Project Approved on Tribal Land” [Las Vegas Sun] The Nevada based, 350 megawatt facility, is expected to generate 200 construction jobs and about 20 permanent jobs on site.

Solar and alternative energy sources have had a rough time in the House of Representatives, an amendment offered by Rep. Tom McClintock (R-CA) to H.R. 1 ( 2011) sought to eliminate subsidies for solar energy research.  His amendment (H. Amdt 34) failed on a voice vote. [NYT] And, that was about the last good news.

Enter the Ryan Budget:

“Instead of ending Big Oil tax breaks, Rep. Ryan’s proposed FY 2013 budget would slash funding for investments in clean energy research, development, deployment, and commercialization, along with other energy programs. The plan calls for a $3 billion cut in energy programs in FY 2013 alone. From 2013 to 2017 the Ryan budget would spend a paltry total of $150 million over these five years on these programs—which is barely 20 percent of what was invested in only 2012. [AmProg]

The result? “If we followed this budget proposal, we’d be allowing fossil fuel companies, entrenched special interests, and their supporters in Congress to block our progress on clean energy and take our country in a direction Americans don’t want to go.”  [NRDC]  The differences between the parties are obvious, as pointed out by the Minority Committee Report:

In March 2012, House Republicans passed the Ryan budget resolution for FY2013, which included significant cuts to energy programs. No Democrats supported this measure.  The Ryan budget would reduce funding for energy programs by almost 50% by 2022.   In June 2012, the House passed H.R. 5325, an appropriations bill for 2013 that proposes to cut funding for clean energy and energy efficiency programs by more than $400 million, a 24% reduction from the previous year and 39% below the President’s request.  This House bill cuts funds for wind energy by 25%, solar energy by 46%, weatherization assistance by 20%, and building efficiency research and development by 43%.  House Republicans voted 207 to 29 in support of this bill.  [DemECHouse pdf]

Nevada Representatives Amodei (R-NV2) and Heck (R-NV3) voted in favor of the Ryan Budget on March 28, 2012. [roll call 140] Representative Berkley (D-NV1) voted against the Ryan Budget to cut energy programs by 50%.  All three members of the Nevada Congressional delegation voted against H.R. 5325 on June 6, 2012. [roll call 342]   H.R. 5325 passed on a 255-165 vote.

How many other solar projects will never be launched because of the House Republican allegiance to the provisions of the Ryan Budget and the attempt to gut funding for solar energy development in H.R. 5325?

OK, You Want To Talk About Solyndra?

OK, Karl Rove and his anonymous super-pac donors want to slam the Obama administration for “picking winners and losers” in the energy sector, and to do so by citing Solyndra and Evergreen.  First, there’s a little problem with the Evergreen part of the attack:

“But in 2002, three weeks into Governor Mitt Romney’s term, Evergreen Solar received $2.5 million from the Romney administration for a “major expansion and to cover operating losses as it tried to become profitable,” according to a February article in Politico. The investment was part of a broader program in which the Romney administration gave millions in subsidies to multiple other companies, Politico reported.” [WaPo]

Thus much for the “picking winners/losers” line.  And there’s a bit of an issue with the Solyndra example too, for those who don’t let ideology get in the way of their economics.   To summarize in entirely too few words, Solyndra had a very good product, but one which because of the nature of its design had limited use.  The company might have made it in a niche market for commercial rooftop installations, BUT …

“The Chinese government is investing in solar production, which has led to a burst in production that has boosted supplies and forced down product prices worldwide.  The price of panels has tumbled more than 40 percent in a year, Zweibel said, a drop that followed price declines in 2009.”  [NYT]

The Chinese were also doing a little something else:

“While some believe China benefits from lower labor costs, Arnold (Mitsubishi) said, “in fact much of manufacturing of solar modules is automated. Really the reason that countries like China are able to sell product at lower cost is they have cheaper access to capital,” because of government investments.” [NYT] (emphasis added)

That’s right. While the Americans were squabbling about whether or not to help capitalize solar energy component and system manufacturing, the Chinese government was pouring capital resources into their own sector.

Unsurprisingly, capitalism (or at least Who Had the Capital) worked; Chinese production soared and American companies with less capital available and parsimonious assistance from the government were left in the lurch.

But, all is not lost.  The attack ads forget to mention that there have been some winners in the American alternative energy sector.

The Coalition for American Solar Manufacturing lists 212 firms with 17,241 employees. [CASM]   Keeping 17,000 people off the unemployment rosters is fine, and we ought to note that First Solar has gotten some nice reviews by the stock pickers:

“While most of its competitors are losing money and have negative EPS numbers, First Solar is still profitable. At around 26 bucks a share, the stock has a current price to sales ratio of .83 and an expected year-over-year revenue growth rate north of 8%. Nearly all of its competitors have negative growth rates.

For fiscal year 2011, First solar reported negative GAAP earnings per share of ($0.45), but when accounting for write-offs and special charges, the company actually earned $6.00 per share. The resulting P/E ratio at this normalized earnings rate is around 5, giving it a very attractive .7 PEG ratio.

Finally, First Solar had sales in 2011 of $2.7 billion, surpassing most of its competitors. Only Suntech had higher sales volume at $3.1 billion. Furthermore, Suntech, along with LDK and Yingli, are Chinese companies that receive huge incentives from the government of that country. There are negotiations taking place between the U.S. and China to level the playing field by removing those subsidies, which can only benefit First Solar.”  [Seeking Alpha]

There are some reasons for concern in the solar energy sector, not the least of which includes European “austerity” measures which will mean lower subsidies for their installations.   Headwinds and all the corporate leaders of First Solar aren’t all that pleased with the Rovian castigation of them as losers:

“It’s surprising a candidate that claims to support U.S. economic growth would criticize a great American success story like First Solar,” said Ted Meyer, vice president of global corporate communications for the company, in a statement. “First Solar has proven that an American company can compete and win in renewable energy globally, and our success supports almost 10,000 American jobs, more than $1 billion in U.S. purchasing, tens of millions of dollars in exports, and record-setting innovation that reduces pollution and enhances U.S. energy security.” [Phoenix BizJournal]

The management of Ecotality wasn’t thrilled with the Rove ad either:

Officials with Ecotality said the ad presented a number inaccuracies with its operations, which has received numerous federal grants over the years particularly associated with electric vehicle charging infrastructure. Much of its work on that front is being done in Phoenix, where the company once had its headquarters and where it still houses its North American operations. [Phoenix BizJournal]

Getting down to specifics, the Rove ad shows a dramatic down arrow for First Solar stock, which isn’t quite the whole story — Now who would have thought that? Shares of First Solar have never dropped to $4.00.  “Shares of the solar company were trading Tuesday at $14.49, up 16 cents, or 1.1%, which is above both a 52-week and all-time low of $13.21. ” [TheStreet] Then, Seeking Alpha reported that some institutional fund and hedge fund manager weren’t seeing enough “growth” in semiconductor sector stocks and we see a bit of selling?  The stock is now selling at $12.60. [FSLR]

Not seeing “sufficient growth” and “going out of business” are two entirely different things.  Wall Street wants instant gratification.  Main Street needs, and will get, more affordable solar and alternative energy in the long run. There are millions of jobs to be created in alternative energy technologies, the question is Where Will They Be?  We can take the ‘day-trader’ Rovian view that that which doesn’t bestow instant gratification for players in the stock markets isn’t really part of our overall economic policy, and it’s OK for the manufacturing jobs to be created in China — or, we can take a longer view that (1) the alternative energy sector is a future source of energy independence and economic advancement, and (2) that the alternative energy sector should be advanced right here in the good old U.S.A.